Chester 01244 405 555

Grosvenor Court
Foregate Street Chester
Cheshire CH1 1HG
DX: 19990 Chester

Shrewsbury 01743 443043

Lakeside House
Oxon Business Park
Shrewsbury SY3 5HJ
DX: 148563 Shrewsbury 14

Airport City, Manchester 0161 537 3324

Offices 204 and 205
Manchester Business Park
3000 Aviator Way
Manchester M22 5TG

Environmental warranties in the courts

Environmental warranties in the courts

2nd September, 2021

Environmental warranties have rarely been considered in the courts; however, a recent example is MDW Holdings Ltd v Norvill [2021] EWHC 1135 (Ch).

The High Court upheld a buyer’s claims that the sellers had breached various warranties, including environmental warranties in the share purchase agreement (SPA). These breaches included compliance with environmental permits, consents required for the operation of its business and environmental law.

Facts:

The buyer’s main claim was for breach of warranties in the SPA.  The buyerargued that due to the non-compliant environmental practices, concealment, and failure to disclose those practices the sellers were in breach of the warranties within the SPA.

The buyer alleged that the target company had been breaching environmental law and avoiding the costs of environmental compliance. This in turn increased the company’s profit to levels it would not have reached had it acted lawfully.

The court awarded damages of £382,600 jointly and severally against the sellers. The decision was largely dependent on its own facts and is a relatively rare example of a breach of warranty claim in relation to environmental warranties.

Comment:

Sellers should ensure that the SPA includes language which is expressly aimed at preventing liability in misrepresentations such as:

  • A non-reliance statement recognising that the buyer has not relied on any representations in entering into the agreement.
  • A no representation statement recognising that seller has not made any representations in the run-up to entering into the agreement.
  • An express exclusion of liability for misrepresentation for both pre-contractual statements and any statements that are set out in the SPA.
  • An express waiver of non-contractual remedies.

Contact us

You might also be interested in...

HGV driver shortage reaching crisis point

HGV driver shortage reaching crisis point

24th September, 2021

BP announced yesterday that they have had to temporarily close some of their sites due to a shortage... Read More »

International trade podcast offers employment tips for Greater Manchester-based exporters

International trade podcast offers employment tips for Greater Manchester-based exporters

24th September, 2021

Launched by the Department of International Trade North West, the podcast featured two specialist lawyers from the Manchester... Read More »

Consultation to take place on the right for employees to request flexible working from day one

Consultation to take place on the right for employees to request flexible working from day one

24th September, 2021

The proposals being put forward would allow all employees the right to request flexible working from day 1.... Read More »

Contact Us